Common bad faith tactics by insurance carriers

In a perfect world, individuals take out insurance policies to protect against unforeseen events. They pay the requisite premium and, if a claim arises, they contact their insurance carrier and the carrier promptly pays the claim.

But, in many cases, this isn’t how it happens in the real world. Sometimes, insurers will utilize what’s referred to as bad faith insurance tactics to refrain or delay paying legitimate claims.

What are bad faith insurance tactics?

Bad faith insurance tactics are essentially strategies or actions conducted by an insurance carrier that negatively affects the policyholder. Bad faith tactics can come in many different forms, but in many cases, insurance carriers use them to delay paying out a legitimate claim to a policyholder.

Common examples of these types of tactics include:

• Failing to acknowledge or promptly communicate with the insured regarding claim requests.
• Refusing to pay requested claims without any investigation or explanation.
• Frequent phone calls to the policyholder’s physician.
• Unnecessary paperwork requests from the policyholder and various parties involved.
• Refusal to accept opinions provided by experts about the policyholder’s condition.

In some cases, the carrier may even abruptly cancel a policy without any notice. Other insurance companies have even offered lump sum payments to policyholders that are much lower than the amount stipulated in the insurance policy.

Massachusetts law

Fortunately, state laws are in place that regulate the insurance industry and protect consumers from these types of actions. Different states, however, have different laws.

In the state of Massachusetts, for instance, there are statutes that specifically bar “unfair and deceptive acts and practices in the business of insurance.” Insurance companies operating in the state of Massachusetts found delaying or failing to pay a rightful insurance claims in bad faith will be liable for damages and attorney’s fees.

This applies to all types of insurance carriers such as disability insurance, homeowners’ insurance, auto insurance or any other.

Defining “bad faith”

It’s important to understand that the definition of “bad faith” per se is examined on a case by case basis by a court of law. Some policyholders may believe an action by their insurance carrier is simply inconvenient, when in fact is constitutes “bad faith” and illegal. Others may think that an act by their insurance carrier is unlawful when it may simply be a nuisance and not necessarily illegal.

Consulting with a lawyer who understands the law

Consulting with an insurance lawyer is the first step to determine this. An attorney can examine the law as it pertains to your specific situation and offer guidance on whether bad faith has occurred.